A recent analysis of Government statistics exposed a startling fact: for the first time since records began, there are more people renting in London than not. The average age of first time buyers has soared in the capital over the past decade.
Nationally, the trend is similar – the average age of first time buyers in the UK stands at 35. An Englishman’s home may still be his castle, but it is increasingly someone else’s. The numbers that belong to ‘Generation Rent’ are growing by the month.
This demographic is largely defined by people in their 20s and 30s, struggling to save the sum required to put down a deposit on a property. They have grown accustomed to the idea of renting for several years. Accordingly, they are coming to expect, more and more, that the properties they rent will come complete with certain creature comforts. For example, the provision of high speed broadband is high on the list of new demands. It is crucial to organise social lives, manage personal finances, stay abreast of the news, or do weekly shops. Life without a lap top or a smart phone, for some, is unthinkable.
However, running aspects of your life through digital means is not the sole preserve of Generation Rent. Landlords, it would appear, are also benefiting from the conveniences of the web.
This month, Rentify, the country’s fastest growing online property management service, announced that 60,000 users were now registered on the site. Currently, the site helps landlords find suitable tenants and runs credit checks on them. In 2013, the site will expand in scope, servicing every element of the lettings process; from rent guarantee to legal advice, and valuation advice.
But why are thousands of landlords now embracing online property management? For many, it is the associated financial savings such services provide. The internet has always been quick to expose existing inefficiencies in a market, as any high street travel agent will testify. For over a decade, holidaymakers have been saving money by booking their own overseas adventures, instead of paying a premium for someone else to do so. In the same vein, landlords are turning to on-line management sites to pocket more of their rental yields.
The numbers are stark. For example, running a credit check on a prospective tenant on Rentify only costs £15, compared to the £150 charged by some lettings agents. When the site’s full management service goes live later in 2013, it will cost the average landlord 7 per cent of their annual rental yield, with no extra charges for gas certificates or inventories. When compared to a typical annual agency management fee of 9 per cent plus additional fees for certificates, contracts, and so on, this represents a saving of at least 2 per cent of rental yield. For a property that generates an annual rental yield of £10,416, this equates to a saving of at least £208 a year, or £5,200 across the life of a 25 year mortgage.
As online property management services become more sophisticated and commonplace, the scope for even further efficiency savings will come. The internet may be the thread that stitches together the lives of Generation Rent, but it is fast becoming a money saving vehicle for a generation of financially savvy property owners, operating in a world where there are more renters than ever before.
George Spencer, CEO, Rentify